On June 25, the U.S. Energy Information Administration (EIA) released the 2012 Annual Energy Outlook (2012 AEO) – the same day the public comment period closed on the Environmental Protection Agency’s (EPA) proposed New Source Performance Standards (NSPS) for new power plants. The NSPS proposal marks EPA’s first step toward controlling carbon pollution from stationary sources, and the agency received a record-breaking more than two million comments supporting the rule. EPA will take the comments it receives into consideration before finalizing the rule later this year. (Get more information on the proposed rule, including WRI’s official comment). The NSPS effectively codifies a transition toward cleaner sources of energy that has been ongoing for several years. The reference case in the 2012 AEO, which does not include the NSPS, projects that the vast majority of new power plants through 2035 will run on natural gas or renewable energy. While the rule does not dramatically alter the trajectory of electricity generation in the U.S., it does ensure that we will not return to the most carbon-intensive fuel sources unless they are paired with carbon capture and sequestration (CCS). With more than a quarter of the country’s fossil-fuel-fired plants more than 40 years old, this rule provides critical insurance that carbon dioxide (CO2) emissions from power plants will decline as aging and highly polluting power plants are retired. This is an important step by EPA to bring greenhouse gas (GHG) emissions in the power sector under control, though more remains to be done in reducing emissions from electricity generation and throughout the economy.
The NSPS establishes a pollution standard of 1,000 pounds of CO2 per megawatt-hour of output. This means that utilities can continue to build the natural gas, wind, and solar power plants that have been the mainstay of new capacity additions in recent years, and hydropower and nuclear energy can also be part of the new generation mix.
New generation capacity from coal would require at least partial CCS to comply. The NSPS gives coal-fired power plants the option of using a 30-year average of CO2 emissions, providing a gentle push to the industry to research and demonstrate the CCS technology that will be vital if coal is to remain a major energy source in a carbon-constrained economy – even as market forces push utilities in the direction of cleaner sources of energy.1 And as we look ahead to the deep emission reductions needed to limit the effects of global warming, CCS will be important for natural gas to remain part of the fuel mix.
The rule does not apply to existing power plants, which represent the greatest source of GHGs in the United States – 34 percent in 2010. Addressing GHG emissions from existing power plants presents a much larger challenge that will need to be done right for the sake of the utilities, their customers, and the environment.
EPA has rules on the books that limit carbon pollution from vehicles, and the proposed NSPS brings us closer to carbon pollution limits for new power plants. These two sectors – transportation and electricity – represent roughly 60 percent of GHG emissions in the United States, so EPA’s progress on creating rules that will eventually reduce U.S. emissions is significant. Additional GHG co-benefits will come from other rules such as Boiler MACT (Maximum Achievable Control Technology), an air toxics standard for industrial boilers; and the NSPS for the oil and gas industry.
WRI’s analysis has highlighted the considerable opportunities to reduce emissions under existing federal and state authority. Many cost-effective reductions can be brought about through new Clean Air Act rules and standards for the utility industry, the industrial sector, and other upstream sources throughout the economy. While doing more in the power sector and beyond will be essential if the U.S. is going to reverse current trends and meet its commitment of reducing emissions 17 percent below 2005 levels by 2020, the Clean Air Act has proven to be a good tool for addressing GHG emissions.
One of the major conclusions of the stakeholder process WRI convened in 2008 to develop guidelines for CO2 capture, transport, and storage was that CCS was ready for commercial scale demonstration at that time. Such demonstrations are underway worldwide, but whether and to what extent CCS will play a role as a climate change mitigation strategy hinges on their success. ↩